Raising awareness about beneficial ownership (BA0018)

Which public issue will this obligation address?

Regulating the issue of beneficial ownership and establishing registers of beneficial owners is closely linked to the prevention of money laundering and financing of terrorist activities.

The document FATF Guidance: Transparency and Beneficial Ownership states that Recommendation 24 applies broadly to ‘legal persons’ meaning any entities, other than natural persons, that can establish a permanent customer relationship with a financial institution or otherwise own property. This can include companies, bodies corporate, foundations, anstalt, partnerships, or associations and other relevantly similar entities that have legal personality. This can include non-profit organisations (NPOs) that can take a variety of forms which vary between jurisdictions, such as foundations, associations or cooperative societies.

In particular countries should review the ML/TF risks associated with these other types of legal person, take into account their different forms and structures and, based on the level of risk, determine measures that will achieve appropriate levels of transparency. Additionally, competent authorities should have timely access to adequate, accurate and timely beneficial ownership information for these other types of legal person.

In accordance with the Report of the European Commission on the assessment of the risks of money laundering and terrorist financing affecting the internal market and relating to cross-border activities, Non-profit organisations (NPOs) may be exposed to the risks of being misused for TF purposes.

The analysis of the NPO's sector vulnerability to TF has been rather challenging as this sector is characterised by a variety of structures and activities which present varying degrees of risk exposure and risk awareness. This is mostly due to the diverging NPO landscape and differences in legal frameworks and national practices. ‘Expressive NPOs’ present some vulnerability because they may be infiltrated by criminal or terrorist organisations that can hide the beneficial ownership making the traceability of the collect of funds less easy, while some types of ‘Service NPOs’ are more directly vulnerable due to the intrinsic nature of their activity.

In the document of the Ministry of Security of Bosnia and Herzegovina Assessment of risk of money laundering and financing of terrorism in Bosnia and Herzegovina for the period from 2018 to 2022 it is stated that it is estimated that there is a high risk of vulnerability to money laundering based on analysis of 16 variables inherent and intermedium for practice of NGO sector in Bosnia and Herzegovina. The Report states that there is insufficient awareness of the NGO sector on anti-money laundering/counter-terrorist financing, and that awareness raising of the NGO sector on the AML/CFT is needed.

Therefore, this obligation will address the challenge and obligation of regulating the issue of beneficial ownership of NGOs, as well as seek to raise awareness and inform NGOs about the importance of beneficial ownership. This fulfils the need for security and accountability in the use of funds, as a public need to ensure that financing is directed precisely to those activities for which the funds are intended. Furthermore, this measure also meets the public need for national security in terms of combating the financing of terrorism.

What is the obligation?

This obligation is essentially a continuation of the same obligation from the 2nd Action Plan, which, due to objective reasons, could not be fully implemented within the planned period. The obligation includes holding of four (4) workshops for civil society organisations on beneficial ownership, at which the CSOs will be thoroughly informed about this issue in the context of enhancing transparency, combating money laundering and financing of terrorist activities, as well as preparing reports and possible recommendations from the workshops held.

How does the obligation contribute to resolving the public issue?

Implementation of this obligation is expected to thoroughly educate CSOs about beneficial ownership, as well as about the obligations of all legal persons. This will enable greater transparency and more effective fight against money laundering and financing of terrorist activities, in which CSOs play a particularly important role.

Why is this obligation relevant to the OGP values?

The relevance of this obligation to the OGP values lies in the fact that regulating beneficial ownership issues, as well as establishing the Register of Beneficial Owners, is closely related to the prevention of money laundering and financing of terrorist activities, i.e. it directly affects the three key OGP priorities:
- Transparency
- Fight against corruption
- Beneficial ownership

Implementation of this obligation will also enable a better understanding of the benefits and importance of opening data on the beneficial ownership of civil society organisations, i.e. non-profit organisations, which are often exposed to the risk of money laundering and financing of terrorist activities.

Milestones:

Determine the manner and locations for holding workshops. | 1 March 2025 – 15 March 2025
Prepare and publish a call for workshops. | 15 March 2025 – 15 April 2025
Hold four (4) workshops and prepare reports and possible recommendations. | 1 May 2025 – 1 September 2025